Private equity bidders : barbarians or best friends

Chapple, Larelle , Clarkson, Peter, & King, Jesse (2011) Private equity bidders : barbarians or best friends. Company and Securities Law Journal, 29(3), pp. 159-177.

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The deal value of private equity merger and takeover activity has achieved unprecedented growth in the last couple of years, in Australia and globally. Private equity deals are not a new feature of the market; however, such deals have been subject to increased academic, professional and policy interest. This study examines the particular features of 15 major deals involving listed company "targets" and provides evidence – based on a comparison with a benchmark sample – to demonstrate the role that private equity plays in the market for corporate control. The objective of this study was to assess the friendliness of private equity bids. Based on the indicia compiled, lower bid premiums, the presence of break fees and the intention to retain senior management are compellingly different for private equity bids than for the comparative sample of bids. Using these several characteristics of "friendliness", the authors show that private equity deals are generally friendly in nature, consistent with industry rhetoric, but perhaps inconsistent with the popular belief that private equity bidders are the "barbarians at the gate".

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ID Code: 50807
Item Type: Journal Article
Refereed: Yes
ISSN: 0729-2775
Subjects: Australian and New Zealand Standard Research Classification > LAW AND LEGAL STUDIES (180000)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Deposited On: 07 Jun 2012 22:34
Last Modified: 07 Jun 2012 22:34

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